Our national currency, the Ghana Cedi, is currently falling at a rather rapid rate. Its rate of fall has created an atmosphere of uncertainty for traders and importers. The situation is particularly acute for those who import goods from foreign nations to sell in Ghana.
Ghana’s economy is said to be import-driven. That means that almost all items on the market are of foreign origin.
The country is therefore currently battling with how to find a solution to the problem of the rapidly depreciating currency.
It is at this time, however, that the government, through the Customs Division of the Ghana Revenue Authority (GRA), is insisting that it will trade in foreign currencies, instead of the Ghana Cedi.
The Customs division has provided justification for why foreign currencies are used during the calculation of customs values before these values are converted into the local currency being the Ghanaian cedi, for the purposes of duty payments at the ports and borders of entry.
According to the Chief Revenue Officer at the Policy and Programmes Department of Customs, GRA, Smile Agbemenu, the Ghana Cedi is not used during the calculation of customs values because it is not an international trading currency.
He stated that, according to Section 69 of the customs law, goods purchased abroad are priced in foreign currencies and invoices presented to the GRA reflect these currencies, the law mandates that the value of goods traded in foreign currency must be used, and converted into Ghana cedis at the current Bank of Ghana exchange rate for duty and tax calculations. This ensures that customs duties are accurately assessed based on the official exchange rates.
“The invoice that you are you are trading is not a cedi invoice. When you are buying goods from China most likely it will be in the US dollar. Most of our invoices coming in, over 80% of them are actually in the United States dollar so that is why over here I did not choose the national currency, I chose the foreign currency and selected the currency code to be the United States one,” he explained.
The Daily Searchlight however states that this is a self-defeating mechanism. Ghana must choose whether to imbue its currency with strength and ensure stability, or insist on raising more revenue at the expense of the Ghana Cedi. The justification for the above policy is that with the Ghana Cedi falling rapidly, the government would bring in more revenue by annexing taxes to foireign currencies. The reverse or knock-on effect, however, is that the Cedi will continue to fall. It is like an animal that is intent on eating its own flesh. It will not survive.
We believe that first and foremost, there must be a real attempt at consolidating the dozens of taxes at the ports. Their percentages must also be reduced, or better yet, consolidated into a single, stable Cedi charge grouped into bands of items. Lastly, everything payable here must be identified in Cedis, and payable in Cedis as against their dollar/forex rate.
Due to the volumes involved, these measures would immediately imbue the currency with the necessary strength and stability, which would reflect on the market.
Persisting with the current arrangement, would mean that we have basically abandoned the Ghana Cedi to its fate, to fare as it will against other foreign currencies.
